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Students: Loans

Volume 479: debated on Monday 21 July 2008

To ask the Secretary of State for Innovation, Universities and Skills how much was repaid to graduates who (a) were paying off their loans and (b) had paid off their loans as a result of overpayments to the student loans company in each year since 2001. (206302)

[holding answer 15 May 2008]: The number of student loan borrowers who have received refunds for over-repayments made in each year since 2001 are set out in Table A.

Table B shows that the number of borrowers making over-repayments from 2001-02 to 2006-07 amounted to 3 per cent. of all borrowers making repayments over this period. The table also shows the amount refunded to borrowers who over-repaid over the same period amounted to just 1 per cent. of the total amounts repaid by all student loan borrowers.

There are a variety of circumstances why borrowers overpay but this mainly occurs when loans come to the end of repayment. Over-repayments from mortgage style borrowers will only arise once their loan has been cleared where the borrower has failed to cancel repayment arrangements with their bank.

For student loan borrowers with income contingent repayment loans, repayments are predominantly made through the tax system. Due to the time lag in the Student Loans Company (SLC) receiving information from HM Revenue and Customs it is possible for borrowers to over-repay before the SLC becomes aware that their repayments should stop.

Where the pattern of payments shows that repayment will be completed during the coming year, the SLC invites borrowers to get in touch to discuss when repayments should stop. Borrowers are then able to make manual repayments. If they do not respond promptly to the SLC, or ignore the invitation, they will probably overpay.

From June this year the SLC is introducing a new website facility specifically for repaying customers. This will give borrowers the ability to view their most current statement and it will also give them the chance to calculate their balance based on what they can see in their payslips.

The SLC is working on further improving the loan end process and has been asked to put in place arrangements which will reduce the number of borrowers over-repaying at the end of repayment. Those arrangements, which are likely to be voluntary, are expected to be in place towards the end of next year.

Any borrower who has repaid, should contact the SLC immediately to obtain a full refund with interest. All refunds include interest at the same (Retail Price Index) rate that was charged on the loan.

Table A: Number of student loan borrowers who have received refunds due to making over-repayments

(a) Borrowers paying off their loan

(b) Borrowers who have paid off their loan

Financial year

Number overpaying

Amount repaid (£)

Number overpaying

Amount repaid (£)

Total number of borrowers receiving refunds for overpayments

Total refund amounts (£)

2001-02

12,300

1,569,000

3,600

394,000

15,900

1,963,000

2002-03

10,000

1,472,000

4,700

853,000

14,700

2,325,000

2003-04

6,300

982,000

10,800

2,563,000

17,600

3,545,000

2004-05

6,300

934,000

12,000

4,439,000

18,300

5,374,000

2005-06

5,600

580,000

19,400

6,898,000

25,000

7,679,000

2006-07

4,100

588,000

15,400

8,230,000

19,600

8,817,000

2007-08

2,800

434,000

19,900

12,643,000

22,700

13,077,000

Total

48,100

6,759,000

85,700

36,021,000

133,779

42,780,000

Notes: 1. Includes all customers (income contingent and mortgage style) who have passed their Statutory Repayment Due Date (SRDD) irrespective of their current status. 2. English domiciled customers only. Source: Student Loans Company

Table B: Total number of borrowers who have overpaid expressed as a percentage of all borrowers making repayments and total refunds as a percentage of all repayments

Number of borrowers making overpayments

Total number of borrowers making payments

Borrowers overpaying as a percentage of all borrowers making repayments

Total refund amounts (£)

Total amounts repaid (£)

Refunds as a percentage of all repayments

2001-02

15,900

645,600

2

1,963,000

392,710,000

<1

2002-03

14,700

666,700

2

2,325,000

462,909,000

1

2003-04

17,600

698,700

3

3,545,000

525,979,000

1

2004-05

18,300

718,900

3

5,374,000

542,577,000

1

2005-06

25,000

670,500

4

7,679,000

548,585,000

1

2006-07

19,600

793,400

3

8,817,000

585,214,000

2

Total

111,600

4,193,800

3

29,703,000

3,057,974,000

1

Notes: 1. Includes all customers (income contingent and mortgage style) who have passed their Statutory Repayment Due Date (SRDD) irrespective of their current status. 2. English domiciled customers only. Source: Student Loans Company